Marvel Parts, Inc., manufactures auto accessories. One of the company’s products is a set of seat covers that can be adjusted to fit nearly any small car. The company has a standard cost system in use for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,040 hours each month to produce 2,080 sets of covers. The standard costs associated with this level of production are: Total Per Set of Covers Direct materials $ 40,560 $ 19.50 Direct labor $ 7,280 3.50 Variable manufacturing overhead (based on direct labor-hours) $ 4,160 2.00 $ 25.00 During August, the factory worked only 600 direct labor-hours and produced 1,800 sets of covers. The following actual costs were recorded during the month: Total Per Set of Covers Direct materials (5,000 yards) $ 34,200 $ 19.00 Direct labor $ 6,660 3.70 Variable manufacturing overhead $ 4,140 2.30 $ 25.00 At standard, each set of covers should require 2.5 yards of material. All of the materials purchased during the month were used in production. Required: 1. Compute the materials price and quantity variances for August. 2. Compute the labor rate and efficiency variances for August. 3. Compute the variable overhead rate and efficiency variances for August.

Mwanamaida Ltd, a company located in Lusaka light industrial area, manufactures plastic containers for the pharmaceutical and cosmetic industries. The plant, in which the company undertakes all of its production, has two production departments – ‘Cutting’ and ‘Shaping’, and two service departments – ‘Stores’ and ‘Maintenance’.

The information provided below has been extracted from the company’s budget for the next financial year which ends on 31st December 2019.

Allocated Production Overhead Costs K

Cutting department 140,000

Shaping department 160,000

Stores department 35,000

Maintenance department 28,000

Apportioned Production Overheads K

Factory rent 525,000

Factory building insurance 70,000

Plant & machinery insurance 39,000

Plant & machinery depreciation 58,500

Canteen subsidy 150,000

The following additional information is also provided:

Cutting Shaping Stores Maintenance

Dept Dept Dept Dept

Floor area (square metres) 18,000 12,000 3,000 2,000

Value of plant & machinery (K) 300,000 50,000 25,000 15,000

Number of stores requisitions 1,000 500

Maintenance hours required 2,700 2,000 300

Number of employees 34 60 4 2

Machine hours 12,000 2,000

Labour hours 9,000 15,000

Required:

(a) Prepare an overhead analysis sheet based on the above information, clearly state the basis used for any apportionments.

(b) Re-apportion the service department costs and calculate the most appropriate overhead rate for each department (rate should be calculated to two decimal places

(c) During the year ended 31 December 2019 the following hours were actually worked and the following actual incurred:

Department Labour hours Machine hours Overhead costs Incurred

Cutting 8,000 14,000 K531,500

Shaping 16,000 3,000 K405,500

Calculate the over/under absorbed overhead for each of the two department for the year ended 31st December 2019. (Total: 20 marks)

Break-Even Sales Under Present and Proposed Conditions

Darby Company, operating at full capacity, sold 148,400 units at a price of $135 per unit during the current year. Its income statement is as follows:

The division of costs between variable and fixed is as follows:

Management is considering a plant expansion program for the following year that will permit an increase of $1,620,000 in yearly sales. The expansion will increase fixed costs by $216,000, but will not affect the relationship between sales and variable costs.

Required:

1. Determine the total variable costs and the total fixed costs for the current year.

2. Determine (a) the unit variable cost and (b) the unit contribution margin for the current year.

3. Compute the break-even sales (units) for the current year.
fill in the blank 5 units

4. Compute the break-even sales (units) under the proposed program for the following year.
fill in the blank 6 units

5. Determine the amount of sales (units) that would be necessary under the proposed program to realize the $7,254,000 of income from operations that was earned in the current year.
fill in the blank 7 units

6. Determine the maximum income from operations possible with the expanded plant.
$fill in the blank 8

7. If the proposal is accepted and sales remain at the current level, what will the income or loss from operations be for the following year?
$fill in the blank 9 Income

8. Based on the data given, would you recommend accepting the proposal?

1. In favor of the proposal because of the reduction in break-even point.
2. In favor of the proposal because of the possibility of increasing income from operations.
3. In favor of the proposal because of the increase in break-even point.
4. Reject the proposal because if future sales remain at the current level, the income from operations will increase.
5. Reject the proposal because the sales necessary to maintain the current income from operations would be below the current year sales.

Choose the correct answer.
b

Moss Exports is having a bad year. Net income is only $60,000. Also, two important overseas customers are falling behind in their payments to Moss, and Moss’s accounts receivable are ballooning. The company desperately needs a loan. The Moss Exports Board of Directors is considering ways to put the best face on the company’s financial statements. Moss’s bank closely examines cash flow from operating activities. Daniel Peavey, Moss’s controller, suggests reclassifying the receivables from the slow-paying clients as long-term. He explains to the board that removing the $80,000 increase in accounts receivable from current assets will increase net cash provided by operations. This approach may help Moss get the loan. Using only the amounts given, compute net cash provided by operations, both without and with the reclassification of the receivables. Which reporting makes Moss look better? Under what condition would the reclassification of the receivables be ethical? Unethical

? Remember: your initial post must be between 150-500 words. In order to earn all 10 points you must make a substantive comment on another student's post. You don't have to stay inside your alpha groups to comment. You may post a comment on the other question.

Valentine Accessories Plus produces brass handles for the furniture industry in a four-stage process –Mixing, Moulding, Polishing and Packaging. Costs incurred in the Polishing Department during January are summarized as follows: WIP - Polishing Process A/C

Normal losses are estimated to be 2½% of input during the period. Inspection takes place during the processing operation, at which point damaged handles are separated from good handles and sold as scrap to local furniture manufacturers at $85 each. At inspection, 2,000 handles were rejected as scrap. These units had reached the following degree of completion: Transfer from Moulding 100% Direct material added 40% Conversion costs 20%

Work-in-progress at the end of January was 4,000 handles and had reached the following degree of completion: Transfer from Moulding 100% Direct material added 80% Conversion costs 50%

Direct materials added and conversion costs are incurred uniformly throughout the process. Required:

(a) Compute the equivalent units and cost per equivalent units for direct materials (From Moulding & Direct materials added) and conversion costs.

(b) Compute the:  cost of the unexpected losses  total cost of the handles completed and transferred out of the Packaging Department  cost of ending work in process inventory in the Polishing Department (3 marks

(c) Complete the Work in Process Inventory – Polishing Process T-account, clearly showing the ending balance.

(d) Prepare the journal entries for the:  assignment of direct materials, direct labour incurred and the manufacturing overhead applied to the Polishing Process  cost of the units completed and transferred out to the Packaging Process

(e) Given that 30% of the unexpected losses were as a result of pilferage, calculate Valentine Accessories true loss for the Polishing Department. (2

Becton Labs, Inc., produces various chemical compounds for industrial use. One compound, called Fludex, is prepared using an elaborate distilling process. The company has developed standard costs for one unit of Fludex, as follows: Standard Quantity or Hours Standard Price or Rate Standard Cost Direct materials 2.50 ounces $ 19.00 per ounce $ 47.50 Direct labor 0.70 hours $ 15.00 per hour 10.50 Variable manufacturing overhead 0.70 hours $ 4.00 per hour 2.80 Total standard cost per unit $ 60.80 During November, the following activity was recorded related to the production of Fludex: Materials purchased, 12,500 ounces at a cost of $223,125. There was no beginning inventory of materials; however, at the end of the month, 3,250 ounces of material remained in ending inventory. The company employs 21 lab technicians to work on the production of Fludex. During November, they each worked an average of 150 hours at an average pay rate of $12.50 per hour. Variable manufacturing overhead is assigned to Fludex on the basis of direct labor-hours. Variable manufacturing overhead costs during November totaled $5,100. During November, the company produced 3,500 units of Fludex. Required: 1. For direct materials: a. Compute the price and quantity variances. b. The materials were purchased from a new supplier who is anxious to enter into a long-term purchase contract. Would you recommend that the company sign the contract? 2. For direct labor: a. Compute the rate and efficiency variances. b. In the past, the 21 technicians employed in the production of Fludex consisted of 4 senior technicians and 17 assistants. During November, the company experimented with fewer senior technicians and more assistants in order to reduce labor costs. Would you recommend that the new labor mix be continued? 3. Compute the variable overhead rate and efficiency variances.

5. Logan’s Enterprises, a manufacturer, reported the following data for May.

Required:

a. How much direct materials were used in production?

b. What were the current manufacturing costs for the month of May?

c. What was the ending balance in the Finished Goods Inventory account?

6. Bluegill, Inc. produces spincast reels. The company’s controller has provided you with the following information.

Beginning balance, Direct Materials Inventory $75,000

Ending balance, Direct Materials Inventory $69,000

Beginning balance, Work in Process Inventory $122,000

Ending balance, Work in Process Inventory $125,000

Direct Labor $757,000

Manufacturing Overhead $347,000

Direct materials purchased $847,000

Required:

Using the above cost information, prepare a cost of goods manufactured schedule.

7. The following data has been taken from the accounting records of Curtis Manufacturing Company for the current year:

Sales $600,000

Purchases of raw materials $350,000

Direct labor cost during period $120,000

Manufacturing overhead incurred during period $60,000

Raw Materials Inventory, beginning $20,000

Raw materials Inventory, ending $25,000

Work in Process Inventory, beginning $47,000

Work in Process Inventory, ending $32,000

Finished Goods Inventory, beginning $75,000

Finished Goods Inventory, ending $82,000

Required:

a. Compute the amount of raw materials moved into production during the period.

b. Compute the amount transferred to finished goods during the period.

c. Compute the amount of goods sold during the period.

8. Classify the following costs incurred by Roper Dress Manufacturing Company by both behavior and function by placing an “X” in the appropriate columns.

Suppose Stuart Company has the following results related to cash flows for 2018:

Net Income of $5,600,000
Increase in Accounts Payable of $600,000
Decrease in Accounts Receivable of $900,000
Depreciation of $1,900,000
Increase in Inventory of $200,000
Other Adjustments from Operating Activities of -$800,000

Assuming no other cash flow adjustments than those listed above, create a statement of cash flows with amounts in thousands.

What is the Net Cash Flow from Operating Activities?

Please specify your answer in the same units as the statement of cash flows.

Operating Leverage

Beck Inc. and Bryant Inc. have the following operating data:

a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place.

b. How much would income from operations increase for each company if the sales of each increased by 10%? If required, round answers to nearest whole number.

c. The difference in the increases  of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher  operating leverage means that its fixed costs are a larger  percentage of contribution margin than are Bryant Inc.'s.

E7-5 Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost LO7-2

Penn Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:

Required:

Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. (Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.)

1. Discuss in 2 pages format APA, privacy issues of the internet of things (IoT) facing accounting departments in the U.S, and what policies and/or controls may need to be added/strengthened to protect privacy.

19. Under sum-of-the-years’-digits depreciation . . .

a. the book value remains the same each year.

b. the depreciation rate changes each year.

c. the denominator of the SYD fraction changes each year.

d. all of the above.

20. For assets acquired during the year, the sum-of-the-years’-digits method requires that the same depreciation rate be used . . .

a. for the remaining months of the year of acquisition, then again in the final year of the asset’s estimated life for any months not depreciated in Year 1.

b. for 12 consecutive months, even if that results in the same rate being used in two different calendar years.

c. throughout the life of the asset.

d. until the end of the calendar year, then recomputed for the next calendar year.

21. Company records show that an employee provided with a company car drove it 80% for business and 20% for personal use. The company reports the personal use as income on the employee’s W-2. As a result . . .

a. the company can depreciate 80% of the car’s cost basis.

b. the company cannot depreciate the car.

c. the company can depreciate 100% of the car’s cost basis.

d. the company can depreciate the car without IRS limits on annual depreciation.

22. On which of the following assets can a company take a Sec. 179 deduction?

a. a warehouse

b. a computer

c. a rental apartment building

d. an office building

X Company is planning to stop the production and sale of Product Q, which lost $8,000 last year. If Product Q is dropped, two things will happen in each of the next three years: 1) last year's loss will be avoided, and 2) sales of Product R will be increased, contributing $10,000 to annual profits. In addition, if Product Q is dropped, the company will be able to sell some equipment immediately for $14,000. Assuming a discount rate of 4%, what is the net present value of stopping the production and sale of Product Q?

Could you give me an answer as fast as you can? Please..! Thank You!

Learning Objectives: CHAPTER 7

1. Measure and account for the cost of plant assets
2. Distinguish a capital expenditure from an immediate expense
3. Measure and record depreciation on plant assets
4. Analyze the effect of a plant asset disposal
5. Apply GAAP for natural resources and intangible assets
6. Explain the effect of an asset impairment on the financial statements
7. Analyze rate of return on assets
8. Analyze the cash flow impact of long-lived asset transactions

EXAMPLE OF WHAT I'M LOOKING FOR:

One thing I found challenging was the credits and debits concept from chapter two and matching them up, (common stock would be a cash debit and stock credit). Once I got it down it was one of those "why didn't it make sense to me sooner" moments but at the time I didn't understand and would switch things. How I approached the chapter was really to make sure I understood all the terms, ie notes payable, accounts receivable, etc. Being able to understand them without going back to the textbook made the process a bit faster and overall easier. Another thing was really taking advantage of the internet and that if there was something in the textbook I didn't understand, looking it up on Google and going through different websites and tutorials. While going through the problems I made sure to take as thorough notes as I could with information that I knew would help me moving forward, targeting the problems that were difficult for me. Being able to go back and read through something that was written in a way that made the most sense to me as an individual definitely proved helpful. I also Skyped a friend who is currently enrolled in a financial accounting class and we would work through problems together.

Imagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on the most advantageous capital structure of a new corporation. Your client formed the corporation in question to provide technology to the medical profession to facilitate compliance with the Health Insurance Portability and Accountability Act (HIPAA). Your client is very excited because of the ability to secure several significant contracts with enough capital.

Use the Internet and Strayer Library to research the advantages and disadvantages of debt for capital formation versus equity for capital formation of a corporation. Prepare a formal letter to the client using the six (6) step tax research process in Chapter 1 that was demonstrated in Appendix A on page 7 of your textbook as a guide.

Write a one to two (1-2) page letter in which you:

1. Compare the tax advantages of debt versus equity capital formation of the corporation for
   the client.
2. Recommend to the client whether he / she should use debt or equity for capital formation of the new corporation, based on your research. Provide a rationale for the response.